Indigenising without expelling investors

HARARE – Eager to restore Zimbabwe's moribund economy, the country's government has been soliciting investment globally.

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But the troubled southern African country finds itself in an unenviable balancing act between protecting its economic interests while attracting foreign investors.

After several years of negative economic growth, some citizens have become vocal about wanting control over business activities.

An organisation calling itself the Affirmative Action Group wants every investment that comes into the country to have local representation. "We want economic independence and that?s what we are pushing for," Tafadzwa Musarara, secretary general of the Affirmative Action Group, told IPS.

AAG regards itself as the local vanguard of black empowerment in business, education and employment. Its demands follow in the wake of legislation passed when the former ZANU-PF government decided to force foreign companies to hand majority ownership to "indigenous" Zimbabweans.

"Colonisation disenfranchised the indigenous people and it is this legacy that we wanted to change through this law," argued Musarara. "Attainment of independence is not complete without economic independence."

The "indigenisation" law, introduced more than a year ago, was aimed at forcing 51 percent Zimbabwean ownership of enterprises. But the law seems to have scared off investors from outside the country, leading to what seem like a change of tack by the current coalition government of the MDC and ZANU-PF. The laws are being reviewed.

During a trip to Europe in June to try and mend relations with European countries, Prime Minister Morgan Tsvangirai, leader of the MDC, told audiences that changing the laws was "an urgent matter that needed to be dealt with".

The minister of regional integration and international trade, Priscilla Misihairabwi-Mushonga, told IPS that, "under the global set-up that we live in, there is need to (strike a balance between) that which allows good investment and that which caters for indigenous provisions because there is always something that talks to ownership of resources by locals," Misihairabwi-Mushonga told IPS.

"The (Affirmative Action Group) is right to lobby for what they believe in but discussions are taking place in government on how to accommodate indigenisation without kicking investors away."

But Musarara argues that the laws are simply being misunderstood. "We are entitled to the resources under the ground and over the ground, like in Europe, the U.S. and Asia. There are unnecessary fears over the indigenisation law. Yes, it calls for 51 percent local ownership but it is open to negotiation like in any other business transaction," argued Musarara.

"This issue has to be clarified before the investors come. The law comes at a price but our resources are not renewable and we should use them for the future generations."

Last month, the organisation caused a diplomatic tiff when it demanded that German-owned international courier, DHL, cede stocks to locals in line with the country?s indigenisation law. The Germany embassy advised the Zimbabwean government that it would reconsider its relations with the country if the interference with DHL continued.

But the Affirmative Action Group insisted that all foreign companies have to comply with local laws. "When we see people flouting laws then we have to force them to comply," Musara said.

The pressure group added that it will also fight against the hiring of expatriates by foreign-owned companies operating in Zimbabwe in situations where there are locals who have the qualifications to run the enterprises.

"We are going to lobby the immigration department and we will oppose the issuing of permits to foreigners flouting indigenisation laws. Foreigners should train our local people and prepare them to take over. We are convinced that we have enough of our own who can now run these foreign companies in high positions," Musarara told IPS.

The organisation also lobbies for laws to protect local industries and create employment for Zimbabweans. According to the International Labour Organisation, Zimbabwe?s unemployment rate stands at 96 percent.

The manufacturing sector is still operating at less than 20 percent capacity and the population depends on food imports for survival.

Musarara is of the opinion that there is a need to make space for local industries to create jobs and boost the country?s economy through exports. "We are totally against an uncontrolled influx of goods. Our people are unnecessarily exposed to competition from unscrupulous foreign producers. We need to protect local industries and create employment," Musarara told IPS.

"What we have at the moment are solutions that take short cuts. We are just shooting ourselves in the foot."

There has been an influx of foreign goods from countries such as South Africa, China, Brazil and India. Most of these goods, ranging from mineral water, maize meal, sugar and breast feeding supplements, have been found to be sub-standard.

The government has since banned some of these goods, including milk formula, cordials diluted in water to make sweetened drinks, chicken and flavoured water.

"We opened our borders in a hurry but we now need to license foreign producers of food and subject their goods to a quality test before they are put on the market," insisted Musarara. (END)